Election Chaos Sends the U.S. Stock Market Plunging: Here are 4 Things to Do Right Now

If you're just waking up, Wall Street and investors are getting a firsthand lesson on what happens when you count your chickens before they're hatched and make assumptions.

In response to what can only be described as a surprising election result, Republicans have maintained control of both houses of Congress, and Republican Donald Trump is the president-elect. This was not the outcome that global stock markets had counted on, which is a big reason why the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite have all been in freefall this morning. At their worst, the indexes were lower in futures trading by as much, if not slightly over, 5%

U.S. markets aren't alone, either, with Japan's Nikkei dipping more than 5% and major European markets opening down around 2%.

However, a plunging stock market isn't a reason for long-term investors to panic. Here are four things you should be doing right now that'll you'll probably pat yourself on the back for later.

1. Relax and put things into perspective

The most important thing you can do right now is to take a breath and relax. Sure, this may not be the decision the stock market expected, but in context to other down days the major indexes have had throughout the years this really isn't all that exceptional.

Table by author. Data source: Wikipedia, Dow Jones, Wall Street Journal.

For example, the 600-point drop in the Dow futures around 2am ET would have ranked among the 10 worst point drops of all time. However, because the Dow Jones Industrial Average is still relatively close to an all-time high, a 600 point drop only works out to 3.3% decline in the index not really that much of a plunge. In fact, the Dow would need to fall almost 1,300 points before we'd match the 20th-worst percentage drop of all-time, a 6.98% decline from Sept. 29, 2008. So while today's expected point drop might look mighty in stature, it's really quite puny when looking at the big picture.

2. Keep investing

Secondly, it's a good idea to consider pulling the trigger if you find high-quality stocks at an attractive price.

A typical response when we see the stock market in freefall, and analysts on television are in full panic mode, might be to retreat to your shell and try to ride out the storm. However, history suggests that buying on any substantive dip is often a very smart move.

Image source: Getty Images.

Based on data from Yardeni Research, there have been 35 stock market corrections that have tallied at least 10%, when rounded to the nearest whole number, since 1950. In all 35 instances a rally has completely wiped out those corrections within a matter of weeks, months, or years. In other words, if you purchased an index fund on any dip over the last 66 years, you've made money.

Take a look at the Brexit plunge in late June. While the Brexit vote caught Wall Street completely off-guard, it also presented a great buying opportunity for patient investors with a longer-term mindset. Once emotions calmed a bit and people had time to digest the immediate economic impact, or lack thereof, from Brexit, the markets began to rally. Eventually, U.S. stocks crept to a new all-time high.

Long story short, consider using today's dip as an opportunity to go hunting for stock-based treasures.

3. Consider brand-name stocks

Third, really take the time to consider what today's large move lower means in the bigger picture for stocks. What you'll likely discover is that it doesn't change the outlook for brand-name, high-quality companies one iota.

Image source: Coca-Cola.

For example, Coca-Cola (NYSE:KO) is still going to sell just as many of its products tomorrow when people wake up around the globe as it did today. Nothing has fundamentally changed with Coca-Cola's strategy of appealing to millennials and Generation Z, and developing new and innovative flavors that'll attract consumers to its brand. Plus, with Coca-Cola selling its products in every country on the planet except for one, North Korea, it has a globally diverse product portfolio with which to fall back on. Regardless of who controlled Congress or became president, Coca-Cola was set to thrive.

Even the likes of a Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) should do remarkably well thanks to its incredible level of diversification. Berkshire, which is steered by investing mogul Warren Buffett and his right-hand man Charlie Munger, owns more than 50 different subsidiaries in various sectors of the economy, including banking, energy, healthcare, retail, and even technology. Buffett has a habit of picking out so-called "boring" companies because they are the ones that find a way to make money in even the most challenging environments.

A rough day in the markets will likely be nothing more than a blip to Coca-Cola and Berkshire Hathaway shareholders a few years from now.

Image source: Getty Images.

4. Add income to your portfolio as a hedge

Finally, consider adding dividend stocks to your portfolio as a way to hedge against days like today. Remember, no matter what we do as investors, or what the Federal Reserve does with monetary policy, economic cycles and stock market corrections are inevitable.

Dividend stocks can be particularly helpful because they serve as beacons to attract long-term investors. Think about it this way, a company would be unlikely to share a percentage of its profits with investors if it didn't believe it had a solid growth outlook over the long run. The ability to reinvest your payouts into dividend-paying companies (known as a Dividend Reinvestment Plan, or DRIP) can also aid in compounding your growth over the long-term.

A good example would be brand-name healthcare giant Johnson & Johnson (NYSE:JNJ), which has raised its dividend for 54 consecutive years and belongs to an exclusive club known as the Dividend Aristocrats, which have raised their annual payouts for at least 25 years in a row. Johnson & Johnson is carrying around one of two remaining AAA credit ratings from Standard & Poor's for publicly traded companies, and its business model is well-protected by inelasticity. In other words, people can't choose when they're going to get sick or what ailment they'll get, meaning its various operating segments (pharmaceutical, medical devices, and consumer health) are always in demand. Johnson & Johnson's 2.8% yield could be a nice way to hedge against stock market hiccups like we're experiencing today.

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Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.

The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). It also recommends Coca-Cola and Johnson and Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.